Intel Accused by Workers of Prioritizing Chip Output Over Safety

(Bloomberg) --

Intel Corp. compromised worker safety at some of its factories to maintain chip production in the midst of the Covid-19 pandemic, according to complaints filed with government agencies and employees at one of the sites.

At a plant in Chandler, Arizona, the world’s largest semiconductor maker did not isolate staff that worked closely with teammates who had tested positive and did not institute tests, people who work there said. Factory managers also dismissed concerns that social-distancing guidelines were not being followed properly, according to the people, who asked not to be identified because they fear sanction by their employer.

Many of these virus-related concerns were also raised in filings to state agencies that regulate workplace safety. The company said it responded with new policies to improve employee safety and kept factory output high because its products are essential.

“We completely understand that people would be concerned,” said Darcy Ortiz, a vice president and general manager of corporate services within Intel’s manufacturing organization. “We have a strong safety culture. We’ve provided a means for people to escalate issues. We welcome that.”

As far as Intel is aware, there has been no transmission of the virus at a company facility. Complaints in internal forums and to state safety agencies have helped the company refine and improve its response to the pandemic, Ortiz added.

One complaint about the Chandler site was sent to the Arizona Division of Occupational Safety and Health. The agency is investigating and won’t comment further until the probe is complete, said Trevor Laky, chief of legislative affairs at the Industrial Commission of Arizona, which oversees ADOSH. It’s unclear if the regulator will take any formal action against Intel.

In Oregon, the Occupational Safety and Health division received more than 40 virus-related complaints about Intel plants in the town of Hillsboro and another nearby location. Submitted from late March to late April, the filings accuse Intel of not enforcing social-distancing rules, not providing masks to workers and letting employees with symptoms return to work without providing proof they tested negative for Covid-19, according to documents the agency shared with Bloomberg News.

Four of those complaints are still under investigation, and only one has been fully closed, according to the documents. The agency doesn’t comment until a case closes or is escalated. It said it often only has to call a company named in a complaint “to get a business to change course.”

In New Mexico, where Intel has another manufacturing site in Rio Rancho, the Occupational Health & Safety Bureau said it received two complaints that resulted in imminent danger notices being posted in the plant’s cafeteria, which was then shut down. Both investigations were closed after Intel took “satisfactory corrective action,” the agency said in documents seen by Bloomberg.

Semiconductor production lines are some of the cleanest places on the planet to prevent dust particles getting into chipmaking machines. But workers who maintain the equipment and monitor production still have to move through other parts of the plant to reach these clean rooms. There are gowning areas, for instance, where staff put on hazmat-style suits to ensure they don’t contaminate the manufacturing process.

Before Covid-19 began to spread, Intel was under pressure to ramp up production. It has struggled to switch to a new way of making smaller, more efficient chips, and spent most of last year unable to increase output enough to meet all orders from customers. Dell Inc. and Apple Inc. publicly complained about this. Semiconductor factories are run as close to flat out as possible because the expensive machinery becomes obsolete in as little as five years.

After the virus hit the U.S., managers at the Chandler facility, known as Fab 42, prioritized output over worker safety, according to employees and internal company messages seen by Bloomberg News.

In early April, on internal message boards Intel uses for employee feedback, workers asked why CDC guidelines on maintaining distances of 6 feet and wearing masks weren’t being enforced, even though there were people at Fab 42 testing positive for Covid-19. Managers said staff should stay home if they’re ill and noted that Intel would be more flexible about how time off accrues against employees’ “Personal Absence” allowance.

On the message board, one employee asked about the company providing masks and implementing testing. A company representative said they were “not aware of any policy prohibiting use of personal masks.”

“Here is what it looks like from the maintenance tech point of view,” another worker wrote on April 2. “Intel don’t give two craps about us as long as we keep product moving.”

When one Fab 42 worker asked why Intel wasn’t slowing production, factory manager Jim Evers replied that the company’s products are essential for medical devices, and working and studying online from home. “What we do makes a big difference,” he wrote in the internal posting, a copy of which was seen by Bloomberg News. “And how we will do it is the safest way we know how to take care of everybody on this campus.”

Evers reacted differently to a worker request for hazard pay, according to the copy of the internal communications.

“The way the question is worded just doesn’t align to the way we think,” he wrote. “We do incentives like OT if we need more hours or gift cards at the holidays if we need more people. We are not interested in doing hazard pay because we are wired to remove the hazard. All efforts over the last two weeks was to make this place a SAFE place to be.” Evers declined to comment through an Intel representative.

In Oregon, Intel workers expressed similar concerns in filings with the state’s Occupational Safety and Health division.

“The equipment is close together which makes it very difficult to stay apart. People are not trying and distancing is not being enforced,” one worker told the agency. “People regularly gather around a computer or talk at a close distance. It’s hard to hear with all the machine noise so it’s difficult to have a conversation from 6 feet away.”

In another complaint filed on March 28, a worker said Intel “has told employees they are allowed to break the 6 foot rule for social distance as long as it is no longer than 30 minutes.” Two other filings also mentioned that managers or the company told staff they could be closer than six feet apart for as long as 30 minutes, according to the Oregon agency documents.

One worker at Intel’s Chandler facility also brought up this issue on the internal message board, citing a company email saying “As a reminder, close contact is defined by Intel as being within six feet or two meters for 30 minutes or more.” That guidance remains in place, based on advice from health authorities, Intel said.

The company has staggered work shift changeover times, and reconfigured rooms to make sure employees can stay away from each other, according to Ortiz, the Intel VP and general manager. She also said Intel has instituted patrols by “red shirts,” employees who police social-distancing rule compliance.

Intel’s response to the pandemic evolved rapidly and the complaints were addressed in a way that satisfied state workplace safety representatives who visited Intel plants in Oregon and Arizona, she also said. Intel initially didn’t provide masks to employees because of limited availability and the need to prioritize supply for medical professionals. Masks have been available at all locations since the first week of April, according to Ortiz.

Intel doesn’t test for the virus because it can’t get test kits, she said. When an employee tests positive by other means, the company does contact tracing and notifies those who were exposed, rather than making general announcements, to preserve medical privacy. Those affected are advised to seek tests and quarantine themselves, Ortiz said. She declined to disclose the number of employees who have been infected.

During the company’s quarterly earnings announcement on April 23, Chief Executive Officer Bob Swan and Chief Financial Officer George Davis thanked workers and said they were proud that the company kept production rolling during the lockdown. They also touted Intel’s safety protocols, and Swan announced $100 million in funds to help workers while shelter-in-place orders are in effect. Part of that money is being paid as a reward for employees who keep coming to work.

“Our world-class safety standards have allowed our factories to continue to operate safely on a relatively normal basis,” Swan said on a conference call with analysts. “We only allow employees in our factories who are essential to the factories’ operations. By design, our clean rooms in factories are among the cleanest places in the world.”

In the first quarter, Intel said it filled 90% of orders on time.

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